Insurance Brokers Look For Relevance As Health Exchanges Grow

Tim Hebert, an insurance broker in Fort Collins, Colo., says he expects that the health care law will wind up being good for his business.

Kara DonahoeCourtesy of Tim Hebert

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Originally published on October 4, 2013 11:38 am

When states and the federal government rolled out online marketplaces to help people buy health insurance on Tuesday, you'd think that old-fashioned insurance brokers would have been worried.

All told about $200 million is being spent on a new army of people to help consumers find their way. These navigators, guides or assisters, as they're called, would seem to threaten the business of traditional brokers.

Many brokers work for small independent businesses. So are brokers at risk of becoming the next travel agents, whose ranks were thinned by online shopping?

Many brokers thought so when the Affordable Care Act was passed back in 2010, says Tim Hebert, an ambitious young insurance broker in Ft. Collins, Colo. "Brokers were concerned they were going to be out of business, that the law was designed to put them out of business," he says.

Part of the law led insurance companies to dramatically cut the commissions they paid brokers. And Hebert says the new government-run exchanges were designed to make it easy to buy health insurance.

Brokers "were concerned that the exchanges would set up a federal entity, and that they would have people come to them and enroll [in the exchanges], and that brokers would not be able to help in that and would not be compensated," he says. "So we'd lose the majority or all of our clients to the exchange, putting us out of business."

At the same time, an estimated 20 million Americans, who couldn't afford health insurance before, would be able to get government subsidies to help them buy it. Brokers worried that that subsidized coverage would only be available through the new online shopping portals in every state.

The exchange in Colorado, for example, has a website designed to take people from uninsured to fully covered, right at the keyboard.

Christopher Ringwood, who works for the exchange in Colorado, shows off the new site. "So I'm entering the ZIP code and county information, my month and year of birth. I'm now going to browse plans," he says. "If I want, I can add additional family members to get a quote."

The website is backed by a toll-free phone number. In Colorado alone, nearly 200 people are available to take calls.

Then there are the navigators. Many work for established nonprofits, which got grants to help people get health coverage.

In every state and the District of Columbia, people like Parker are taking government-sponsored training to help the uninsured find coverage.

"I'm an attorney," Parker says. "So I felt like I could help people do this, and it makes me feel all warm and fuzzy inside, and I get to go home and feel like I did some good in the world that day."

With all the new people like Parker being brought on, it's not surprising that insurance brokers thought they were being pushed aside.

That's despite the fact that the White House wants brokers to be part of its larger effort to get health coverage for as many Americans as possible by the end of March. It has set a goal of 7 million, which it calls ambitious.

Brokers lobbied Congress hard to make sure they wouldn't be replaced by navigators. Those efforts helped pass laws in 16 states restricting what navigators can do. The brokers say they don't want to be undercut by people who don't face the same licensing and liability requirements they do.

But Colorado broker Hebert says he isn't worried about the new competition. "For our business, we anticipate this is the single best opportunity for us to grow," he says.

Hebert is planning to work with navigators and expects they'll send him cases that are beyond their expertise. "Brokers are designed to really handle the more complex issues. Navigators are more of an education and outreach entity," Herbert says.

But Jessica Waltman with the National Association of Health Underwriterssays most people don't appreciate that buying health insurance is a lot more complicated and consequential than buying an airline ticket online.

"When you go to an agent or broker to buy your coverage, then you're going to them for the whole year; it's not just for enrollment purposes," she says. "When you ... have a claim, if you lose your card, if you have a problem, if something isn't covered that you thought was covered — all those things you can go back to the broker, and then it's their job to solve that problem for you."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

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It's been three days since the health insurance marketplaces set up under the Affordable Care Act were opened for business. And with the glitches and delays of registering online, it's been a bumpy ride. For now, when computers are down people have other ways they can sign up for coverage. Insurance brokers are one such option. Brokers fought the health care bill as it was going through Congress, mainly because it establishes an alternative middleman called a navigator, and brokers feared the competition.

But as Eric Whitney reports, insurance brokers may actually fare better under the law than they originally thought.

ERIC WHITNEY, BYLINE: Tim Hebert is an ambitious young insurance broker in Fort Collins, Colorado. In 2010, when the Affordable Care Act passed, he says most brokers thought it looked bad.

TIM HEBERT: Brokers were concerned they were going to be out of business, that the bill was designed to put them out of business.

WHITNEY: Part of the law caused insurance companies to dramatically cut the size of commissions they paid brokers. And every state was supposed to have a new marketplace or exchange, to make buying health insurance easy.

HEBERT: They were concerned that the exchanges would set up, like, a federal entity. And that they would have people come to them and enroll there, and that brokers would not be able to help in that and would not be compensated. So we'd lose the majority or all of our clients to the exchange in putting us out of business.

WHITNEY: This at a time when an estimated 20 million Americans will be able to get new subsidies to help them buy insurance over the next few years. Brokers worried that that coverage would only be available through government exchanges and their new online shopping portals in every state.

Christopher Ringwood shows off the one he's been working on for Colorado, designed to take people from uninsured to fully covered right at their keyboard.

CHRISTOPHER RINGWOOD: So I'm entering the zip code and county information, my month and year of birth. I'm now going to browse plans. If I want I can add additional family members to get a quote. And now I'll browse for plans for the two individuals that I selected.

WHITNEY: The website shopping site is backed by a toll-free number. Nearly 200 people are available to take calls in Colorado alone. The near-army of ground troops states and the federal government are hiring also includes navigators, or face-to-face helpers. Many work for established non-profits, which got federal grants to help people get health coverage.

HEATHER PARKER: Hi, my name is Heather Parker and I'm an in-person navigator with Planned Parenthood of Metropolitan Washington.

WHITNEY: In every state, people like Parker are taking government-sponsored training to help the uninsured find coverage.

PARKER: I'm an attorney, so I felt like I could help people do this. And, you know, makes me feel like I did some good in the world that day.

WHITNEY: With all the new people like Parker being brought on, it's not surprising insurance brokers thought they were being pushed aside. Brokers lobbied Congress hard to make sure they'd be allowed to sell exchange policies, too - and since then, have helped pass laws restricting what navigators can do in 16 states. They say they don't want to be undercut by people who don't face the same licensing and liability requirements they do.

But Colorado broker Tim Hebert says he's not worried about the new competition.

HEBERT: For our business, we anticipate this is the single best opportunity for us to grow.

WHITNEY: Hebert is planning to work with navigators, and expects they'll send him cases that are beyond their expertise.

HEBERT: Brokers are designed to really handle the more complex issues. Navigators are really an education and outreach entity.

JESSICA WALTMAN: When you go to an agent or broker to buy your coverage, then you're going to them for the whole year, it's not just for enrollment purposes.

WHITNEY: Jessica Waltman, with a national association of brokers, says most people don't appreciate that buying health insurance is a lot more complicated and consequential than buying an airline ticket online. She thinks they're going to want brokers.

WALTMAN: When you go and have a claim - if you lose your card, if you have a problem, if something isn't covered that you thought was covered - all those things you can go back to the broker and then it's their job to solve that problem for you.

WHITNEY: The White House wants brokers to be part of its larger effort to get as many Americans as possible health coverage by the end of March. It's set a goal of seven million, which it calls ambitious.

For NPR News, I'm Eric Whitney.

CORNISH: This piece is part of a collaboration between NPR and Kaiser Health News. Transcript provided by NPR, Copyright NPR.